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Learnings from the Long View by Peter Schwartz
IN 1991, Peter Schwartz wrote a particularly accessible introduction to Scenario Building, The Art of the Long View.
Learnings from the Long View is a retrospect on what he has learned about building scenarios for government and private enterprise.
Scenarios are stories created from current data and insight that describe possible futures we could face.
Unlike forecasts, which give a single version of the future, scenario builders always present a set of possible futures, one of which could unfold.
All consequential decisions we make today inform the quality of our future. Thoughtful decisions are always based on how we think the future will unfold.
Most people are bewildered enough by the present to think too far ahead. This is where clever scenarios add value. They provide an approach to thinking about what the future could hold.
Sit down with a few friends over strong coffee and talk about the future they see. When the conversation is running down, pose this question: on what basis do you come to your conclusions?
What is the quality of the research which informs your thinking? How wide is your understanding of sociology, technology, environmental matters, economic and political factors?
What professional scenario builders do is to gather the input of experts and formulate results into useable cognitive tools.
The book describes a set of lessons Schwartz has learned from leading organisations, in building scenarios relevant to them.
Lesson: we are all prone to leap to easy conclusions and not consider different interpretations of the situation. This is usually because we do not have people around us with a diversity of views.
Lesson: diversity really does matter. Inviting people into the conversation who make you uncomfortable is a very good idea.
Lesson: scenario building is not only about the intellectual challenge. It involves the human challenge of inviting disagreement and making it safe for people to disagree.
Most people are not very good at this socially or professionally. Many scenarios, even those developed in the best of circumstances, are wrong.
When GBN, Schwartz’s company, built scenarios at the beginning of this century, they failed to see how interconnected the global banking system had become. This led to underestimating the fall-out from a financial crisis in one country on the rest of the world.
The second thing they failed to see was the enormity of the banking shadow economy. Banks were generating enormous profits from selling and trading complex financial instruments, such as derivatives and collateralised debt obligations (CDOs).
These instruments were off the balance sheets of the banks, and so avoided regulatory scrutiny.
There were authorities who held contrary views regarding the banking industry, such as Nouriel Roubini. Involving him in the process would have added an important perspective.
Lesson: when creating scenarios, always ask the questions: Could your data be wrong? Could potential problems be bigger than anyone thinks? How can we challenge our deepest assumptions?
Lesson: when building a set of scenarios, one scenario invariably has the greatest potential for change and disruption to your business.
This scenario needs the most engaging discussion about strategic implications. Of course, the more senior the people engaged in the scenario process, the more likely results are likely to be taken seriously in the organisation.
Lesson: scenario building should not stop with one project. This process of thinking about the future yields the most powerful results when it is part of the ongoing business conversation.
Schwartz observes: “We’ve also learned in the past 20-plus years that it is possible, and desirable, to teach… organisations how to do scenario planning.”
Risk management is another arena where scenario planning can be a very significant tool. This is because it goes beyond risk management to include opportunity management.
The book ends with three scenarios for 2025 built on a deep analysis of sociological, technological, environmental, economic and political factors.
The first and most gloomy scenario Schwartz calls “The Cascading Crises”. The scale and complexity of crises in any area seem beyond our human abilities to manage them.
For example, climate change leads to massive water shortages, which causes problems with food production, which leads to mass migration, which produces a whole range of political and economic troubles.
One could easily imagine Nigeria imploding over oil, religion, culture or tribalism, says Schwartz. Consider the implications of that for neighbouring states and the continent.
Crime, especially cybercrime, is on the rise and is tied to a massive global black market for everything from weapons to drugs. In this scenario, crime turns itself into a kind of invisible nation, one with a very strong, utterly unregulated economy.
The second scenario is called “The Great East-West Match”. In this scenario, the world is impacted by the rivalry between the United States and China. At its root, this is a rivalry between democratic capitalism and autocratic capitalism.
This match will not be a Cold War on the brink of a full-blown war, because their economies are far more interdependent than those of the US and the Soviet Union ever were.
The world in 2025 will be better than today, with poverty steadily shrinking even as the political conflicts and tensions in the world continue to rise.
The third scenario Schwartz calls “The Long Boom 2”. The global marketplace is lightly but effectively regulated and so there are more winners than losers. A true global middle class begins to emerge. A knowledge-driven economy spreads rapidly around the world.
Of course, we have no way of knowing which scenario will come closest to unfolding. In all likelihood, the future will hold elements of each.
Schwartz concludes this engaging book by noting: “…if there is one thing I have learned repeatedly in the past 20-plus years, it is this: The world may be uncertain and unpredictable but that’s no excuse for being unprepared.”
Readability: Light ---+- Serious
Insights: High -+--- Low
Practical: High ---+- Low
- Fin24
*Ian Mann of Gateways consults internationally on leadership and strategy. Views expressed are his own.
IN 1991, Peter Schwartz wrote a particularly accessible introduction to Scenario Building, The Art of the Long View.
Learnings from the Long View is a retrospect on what he has learned about building scenarios for government and private enterprise.
Scenarios are stories created from current data and insight that describe possible futures we could face.
Unlike forecasts, which give a single version of the future, scenario builders always present a set of possible futures, one of which could unfold.
All consequential decisions we make today inform the quality of our future. Thoughtful decisions are always based on how we think the future will unfold.
Most people are bewildered enough by the present to think too far ahead. This is where clever scenarios add value. They provide an approach to thinking about what the future could hold.
Sit down with a few friends over strong coffee and talk about the future they see. When the conversation is running down, pose this question: on what basis do you come to your conclusions?
What is the quality of the research which informs your thinking? How wide is your understanding of sociology, technology, environmental matters, economic and political factors?
What professional scenario builders do is to gather the input of experts and formulate results into useable cognitive tools.
The book describes a set of lessons Schwartz has learned from leading organisations, in building scenarios relevant to them.
Lesson: we are all prone to leap to easy conclusions and not consider different interpretations of the situation. This is usually because we do not have people around us with a diversity of views.
Lesson: diversity really does matter. Inviting people into the conversation who make you uncomfortable is a very good idea.
Lesson: scenario building is not only about the intellectual challenge. It involves the human challenge of inviting disagreement and making it safe for people to disagree.
Most people are not very good at this socially or professionally. Many scenarios, even those developed in the best of circumstances, are wrong.
When GBN, Schwartz’s company, built scenarios at the beginning of this century, they failed to see how interconnected the global banking system had become. This led to underestimating the fall-out from a financial crisis in one country on the rest of the world.
The second thing they failed to see was the enormity of the banking shadow economy. Banks were generating enormous profits from selling and trading complex financial instruments, such as derivatives and collateralised debt obligations (CDOs).
These instruments were off the balance sheets of the banks, and so avoided regulatory scrutiny.
There were authorities who held contrary views regarding the banking industry, such as Nouriel Roubini. Involving him in the process would have added an important perspective.
Lesson: when creating scenarios, always ask the questions: Could your data be wrong? Could potential problems be bigger than anyone thinks? How can we challenge our deepest assumptions?
Lesson: when building a set of scenarios, one scenario invariably has the greatest potential for change and disruption to your business.
This scenario needs the most engaging discussion about strategic implications. Of course, the more senior the people engaged in the scenario process, the more likely results are likely to be taken seriously in the organisation.
Lesson: scenario building should not stop with one project. This process of thinking about the future yields the most powerful results when it is part of the ongoing business conversation.
Schwartz observes: “We’ve also learned in the past 20-plus years that it is possible, and desirable, to teach… organisations how to do scenario planning.”
Risk management is another arena where scenario planning can be a very significant tool. This is because it goes beyond risk management to include opportunity management.
The book ends with three scenarios for 2025 built on a deep analysis of sociological, technological, environmental, economic and political factors.
The first and most gloomy scenario Schwartz calls “The Cascading Crises”. The scale and complexity of crises in any area seem beyond our human abilities to manage them.
For example, climate change leads to massive water shortages, which causes problems with food production, which leads to mass migration, which produces a whole range of political and economic troubles.
One could easily imagine Nigeria imploding over oil, religion, culture or tribalism, says Schwartz. Consider the implications of that for neighbouring states and the continent.
Crime, especially cybercrime, is on the rise and is tied to a massive global black market for everything from weapons to drugs. In this scenario, crime turns itself into a kind of invisible nation, one with a very strong, utterly unregulated economy.
The second scenario is called “The Great East-West Match”. In this scenario, the world is impacted by the rivalry between the United States and China. At its root, this is a rivalry between democratic capitalism and autocratic capitalism.
This match will not be a Cold War on the brink of a full-blown war, because their economies are far more interdependent than those of the US and the Soviet Union ever were.
The world in 2025 will be better than today, with poverty steadily shrinking even as the political conflicts and tensions in the world continue to rise.
The third scenario Schwartz calls “The Long Boom 2”. The global marketplace is lightly but effectively regulated and so there are more winners than losers. A true global middle class begins to emerge. A knowledge-driven economy spreads rapidly around the world.
Of course, we have no way of knowing which scenario will come closest to unfolding. In all likelihood, the future will hold elements of each.
Schwartz concludes this engaging book by noting: “…if there is one thing I have learned repeatedly in the past 20-plus years, it is this: The world may be uncertain and unpredictable but that’s no excuse for being unprepared.”
Readability: Light ---+- Serious
Insights: High -+--- Low
Practical: High ---+- Low
- Fin24
*Ian Mann of Gateways consults internationally on leadership and strategy. Views expressed are his own.
